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People in Luhansk have largely tried to keep their heads down and go about their business during the two months that armed separatists have occupied this city's administration building and declared independence from Kyiv.

But the fact the city this week has witnessed some of the worst fighting in the Ukrainian crisis to date is creating a sense of panic, as residents feel trapped in a situation where neither the government nor the separatists can ensure their safety.

The fear has grown as rumors swirl around the city that the Ukrainian Air Force could be preparing to bomb separatist strongholds downtown. On June 3, air-raid sirens went off in the city. In some offices people were allowed to leave work early to race home.

The mayor's office, which has been sidelined by the separatists, even published on its website a list of locations that could be used as bomb shelters by the public.

The air-raid scare comes as ordinary residents are still reeling from the explosion that damaged the city's main administration building in the city center on June 2. The explosion at the building, which the separatists use as their headquarters, occurred during the middle of the day in a heavily frequented office and residential district as fighting between separatists and government forces raged on the southern outskirts of the city.

Tracer bullets can be seen being fired by pro-Russian militants at the National Guard base in Luhansk overnight on June 3-4.

The separatists accuse the air force of targeting the building, while the government says the explosion was caused by the separatists themselves when they tried to fire a surface-to-air missile from the building at a warplane.

Meanwhile, the scale of the fighting at the southern edge of the city raised fears that neither the separatists nor soldiers are ready to spare civilians or their homes.

On June 2, hundreds of separatists attacked the border guards' command building on the edge of town, heavily damaging nearby apartment blocks. The damage came as the separatists occupied buildings to fire on the border guard's command center, and the border guards fired back, forcing residents to flee for their lives.

After the 12-hour battle, which pitted separatists with mortars and rocket-propelled grenades against border guards reinforced by Ukrainian special forces and air strikes, Kyiv declared victory with five separatists killed and four government soldiers critically injured.

But on June 4, the soldiers abandoned their position to relocate to what Kyiv called a "safer location" and the rebels seized their base and ammunition. Kyiv also lost a National Guard outpost near Luhansk during overnight fighting on June 4.

No-Man's-Land

As the public's fear of being caught in a crossfire now rises, it adds to the feeling of living in a no-man's-land that has characterized Luhansk ever since separatists took over the regional administration building on April 29.

Since then, the separatists have held sway in the town, as elected authorities, including the mayor and police chief, have left and civic bodies have been intimidated into silence.

The level of security in the city has plunged, as the separatists regularly patrol the areas around their two strongholds in the main administration building and the Ukrainian Security Service building but venture beyond only occasionally to attack or abduct presumed opponents.

Local police have shown no intention of opposing pro-Russian militants in Luhansk.

The police, who maintain routine patrols, do not intervene when masked and armed separatists abduct their targets and take them to their headquarters, even in broad daylight.

The eclipse of the police, who are heavily outgunned by the separatists, has created a surge in crime in the city. The Luhansk department of the Interior Ministry recently told the press that the situation was now out of its control.

Police sources say the most frequent forms of crime are car theft and hold-ups of cash couriers delivering business receipts to banks. The armed criminals wear masks and camouflage fatigues just like the separatists.

In an apparent effort to introduce order, the self-declared "Luhansk People's Republic" imposed a curfew in the city on May 3, forbidding people to be outside from 11 p.m. to 6 a.m. However, even before the curfew, shops closed at 10 p.m., as people rarely venture outside after dark for fear of their own safety.

What will happen in the coming days in Luhansk is impossible to predict. Despite the explosion at the main administration building, the separatists continue to hold the building and use it as their headquarters. But whereas local journalists were once free to visit the building and meet separatist leaders, today it's only possible to enter by special invitation.

Ordinary people observe the building from a distance and try to guess for themselves what comes next.

PHOTO GALLERY: As fighting rages in the east, families flee to temporary accommodation elsewhere in Ukraine.

A mother and child who have fled from fighting in Slovyansk stand in their temporary accommodation in the eastern town of Nyzhnya Krynka on June 4.

A family settles in their temporary accommodation in the town of Nyzhnya Krynka in eastern Ukraine.

A child puts on an Orthodox cross in temporary accommodation in the town of Nyzhnya Krynka.

Anya Savchenko (right), Sergei Smirnov, and their 9-month-old baby, who have fled fighting in Slovyansk, stand in their temporary accomodation in the town of Nyzhnya Krynka.

Children of families who have fled from fighting in Slovyansk play together at a temporary accommodation in the town of Nyzhnya Krynka in eastern Ukraine on June 3.

A child from a family who has fled from fighting in Slovyansk is seen in a mirror at temporary accommodation in a dormitory in the town of Ilovaysk on June 3.

Children of families who have fled from fighting in Slovyansk play with toys at temporary accommodation in a dormitory in the eastern town of Ilovaysk on June 3.

Children of families who have fled from fighting in Slovyansk play with toys at temporary accommodation in a dormitory in the town of Ilovaysk on June 3.

Families who have fled fighting in Slovyansk eat at the canteen of the Makiyivsky Coke and Chemical Plant in the town of Makiyivka on June 4.

Families who have fled fighting in Slovyansk, arrive at the Makiyivsky Coke and Chemical Plant in the town of Makiyivka on June 4.

Local residents board a bus to Moscow in the eastern town of Kramatorsk as they flee the fighting in Slovyansk on June 4.

Luhansk is just 30 kilometers from Ukraine's eastern border and directly on the supply line of weapons and irregular volunteers from Russia that Western governments say are feeding the separatist rebellion. Moscow denies it is aiding the separatists but has done nothing to stop the cross-border flow.

The border guards' command facility which the separatists seized in Luhansk on June 4 controls all the border posts along the border and was central to Kyiv's efforts to curb the flow of men and materiel across the border by itself.

Written by Charles Recknagel in Prague based on reporting from Luhansk by Vlad Shevchenko; Merhat Sharipzhan contributed to this report from Prague